Success and More - OECD · 760 425 Total # of Sub: 4,017 Total # of Sub: 11,059 3,904 1,890 1.226 976 a . KT Broadband Access Overview. Slide 7 7 B KT Broadband Service Performance

Slide 1

Success and Morefocused on ADSL

5 December 2001

Slide 2

22

? . Introduction to KT

? . Overview on KT’s Broadband Access Service

? . Future Development Model for KT’s Broadband

Access Service

Contents

Slide 3

33

BBChronicles & General description

History- Jan.1982 : Korea Telecom Established

- May.1996 : 20 Million Subscriber Secured

- Oct.1999 : Declaration of KT’s Vision 2000, “Cyber World Leader”

- Dec.2000 : IMT-2000 and satellite broadcasting business licenses

acquired

- 2002 : Complete privatization scheduledGeneral description

- Employees : 46,000

- Turnover(2000) : $ 9.6 Billion

- No. of telephone Sub. : 22 Million

- No. of Wireless Sub.(OCT. 2001) : 9 .7 Million

- Subsidiaries : KTF, ICOM, KTI, etc.One of the 500 Global Largest Companies(Financial Times,1 May 2001)

a . KT Introduction

Slide 4

44

BBKT Group Overview

Sector Entity Business (Market share %,#Market Position)

KT’sOwnership

Fixed Line

Internet & DataCommunications

Wireless

Contents &e-Commerce

Digital SatelliteBroadcasting

KDB

40.7%

46.6%

66%

15%

-

-

-

KT

KT

KT

� Local (98%, #1)� Long distance (86%, #1)� International (64%, #1)

� Leased line (70%, #1)� Broadband access (49%, #1)

� Mobile services– Voice (34%, #2)– Data (43%, #1)

� IMT-2000 services (4Q, 2002)

� Service platform(Bizmeka)� Internet broadcasting

� Multi-media broadcasting service (4Q,2001)

� Portal� e-Commerce Entertainment

a . KT Introduction

Slide 5

55

BB History of Megapass

1997- First Trial Service(1,500 subscribers)

Sep. 1998- Second Trial Service

Jun. 1999-Launch of Commercial Service

Sep. 2000 - Number ofSubscriber Exceeded1 million

Feb. 13, 2001 - Number ofSubscriber Exceeded2 million

Oct. 31, 2001 - Number ofSubscriber Exceeded3.5 million

ADSL Pilot ServiceADSL Pilot Service

Demand > SupplyDemand > Supply

a . KT Introduction

Slide 6

66

BBBroadband Market Share

KT

42%KT

49.4%

Others11.5%

Thrunet 15%

2000 2001(E)

HTI

27%

Thrunet

19%

Others

19%

HTI23.9%

4Q.1999 : KT 4.5% , HTI 47% ,Thrunet 48.5%

Broadband Market Share (Unit: Thousands)

1,730

1,100

760

425

Total # of Sub: 4,017 Total # of Sub: 11,059

3,904

1,890

1.226

976

a . KT Broadband Access Overview

Slide 7

77

BBKT Broadband Service Performance

1,729

4,900

3,904

5,620

0.2

1.0

2.0

1.3

0

1000

2000

3000

4000

5000

6000

2000 2001(E) 2002(E) 2003(E)0

2

4

6

8

10

12

14

16

18

Subscriber(1,000)

Revenue: Bil. US$

(43.0%) (49.4%)

(51.6%) (55%)

( ) : Market share

Source : KT Marketing Group(2001.5)

Revenue

# of subscribers

Booming ofMultimedia Business


Slide 8

88

Key SuccessFactors ofBroadband

Market

• All nation wide dry copper network

of KT could cover 95% of total

household without additional

investment for ADSL service

On Time Network Delivery

Truck Roll Effect

2

20

10 times/day

Productivity up

• Cable modem• Traditional ADSL splitter

• ADSL using micro-filter

On Time Service Delivery

Customer Care System

• One stop installation team

- 2,500 Installation engineers

• Variety of product line

- ADSL Premium /Lite,

Homenet, Ntopia etc.

• Before subscribing step

- ATLAS (ADSL Transmission Line Analysis System)

• Subscribing step

- On time service setup

• After subscribing step : Quick recovery support system

BBKey Success Factors of KT-Early Stage

• MAX.10~15 subscribers install / a day

• Shorten installation time

• Installation cost down


Slide 9

99

BBKey Success Factors of KT-Mature Stage

Various SolutionsVarious Solutions - ADSL : ATM-based - Ntopia : LAN-based - B&A : Home PNA

Emplyoyee Emplyoyee TrainingTraining - Training on-going

- Training 3,000 persons in Research

center

New Service InductionNew Service Induction - VDSL - VOD - W-LAN etc, …

Enhancement of Infrastructure Enhancement of Infrastructure - Upgrading Backbone - Constructing DQME(Data Quality Measurement Equipment) etc, ...

AggressiveAggressive&&

SophisticatedSophisticatedStrategyStrategy

Equipment Cost ReductionEquipment Cost Reduction - Bulk- Purchase by KT - Reduction of equipment costs . 552$('99) a 276$('00)a 165$('01) (Unit cost of line)


Slide 10

1010

Description Speed Servicecharge Target proportion

ADSL(ATM)

download 2~8Mbpsupload 256~640Kbps

24 $ Large quantity ofhousing

85.6%

B&A(HomePNA) Symmetric 1Mbps 22 $

Low-cost based,Existing APT 13.4%

Satellitedownload 1Mbpsupload 56Kbps 23$

Agricultural/Fishingvillages 0.34%

BWLL Symmetric 1Mbps 22$ Blind spot, Industrialcomplex

0.02%

Ntopia(LAN) Symmetric 2~2.5Mbps 29 $ Newly-building APT 0.64%

? Proportion as of October 2001

Megapass Classes

Megapass is the umbrella brand of KT’s broadband access services which includes ADSL, B&A, Satellite, BWLL, and Ntopia.


Slide 11

1111

ADSL Network Coverage

Network Coverage

• Direct installationwithout quality

degradation

• Direct installationwith a little quality

degradation

78%

Quality guarantee through optical fiber

3Km

4Km

2Km Network CoverageNetwork Coverage

2Mbpsguarantee 93% 86% 78% 39%

5%(100%) 17%(95%) 36%(78%)42%


Slide 12

1212

ADSL Network Configuration

Configuration

ATMExchange

ATM Network

DSLAM

ATU-R FLC-D

FLC-C

RT

DSLAM

ONU

ONU

F/O

F/O

F/O Kornet

µ-filter

µ-filter

ATU-R

µ-filter

ATU-RFMS* FMS: FLC Management

System

uQxQcfun\Bu��QBx��B��B��BQBc��Bf��Bu��Bn��NBBhne\Bh��Bn��Be��

Access Network Core Network

FES

DHCPServer

GES

Customer Network

FE

KORNETS/V/ADSLDSLAM

FE

BBofh

é

é

é

é

S/V/ADSLModem

FE

Router POSSTM-1

Local ServerBx�fBQBy��

QBe��u��

STM-1

FLC

SDHSTM-1

FLC

T3

Apartment Local Exchange OfficeKORNET Node

GSR

FESStacking

ADSL

Ntopia

B-RAS


Slide 13

1313

BProfitability of ADSL

Comparison of Profitability

5

10

15

20

25

30

ADSL Local Long Distance

(as of August 2001, w��\wuFK

Profit-bearing Power of ADSL

Description ADSL Local Long Distance

ARPU(US $) 24 3.3 3.4


Slide 14

1414

Trends of ADSL Equipment Investment

Equipment Purchase Cost per line

100

200

300

400

500

600

2000.12 2001.3 After 2001.4.

Equipment Investment Ratio

Jw��\wuFK

Description Dec 2000 Mar 2001 Apr 2001

Buying Cost(US $) 372 276 165


Slide 15

1515

Economical Efficiency Analysis

Jw��\o��BwuFK

t�� q��Be�� q��Br��

-500

0

500

1000

1500

2000

20002001 2002 2003 2004 2005

t�� q��Be��c��

prx NPV

-1,500

-1,000

-500

0500

1,000

1,500

2,000

2000 2001 2002 2003 2004 2005

-2,000

Analysis on Profit and Loss NPV Analysis


Slide 16

1616

AccessCharge

- Create additional profit, e.g., leased-line fee based on interconnection with CDN ISPs and other ISPs (e.g., SuperNet)

Appliedservices

- Moving picture service: web-camera (for PCs and remote-control monitors) - Home G/W service, indoor wireless LAN - Electronic payment service: IC card, card reader, etc.

Value-addedservices

Web TV STB, local server installation, cyber-community, apartment remote management, cyber-school, VOD service, intranet service, cyber security service, etc.

Wire/wirelessIntegratedservices

-Wire/wireless integrated services bundled with wireless LAN services on notebooks and PDAs in Hot Spot areas-Anywhere, anytime available with a single device (e.g., OnePhone)

Servicetypes

Description AdditionalProfit

-8.3 M annually (SuperNet)-N x 80 M (Interconnection with other ISPs)

304 M(2003)

214M(2003)

Additional Profitability Model of ADSL

Additional Profit Modela . KT Broadband Access Overview

Slide 17

1717

Highly sophisticated Business Structure

(Resource : Marketing Group in KT)

0

500

1000

2000

3000

4000

5000

7000

10000

1996 1997 1998 1999 2000 2001

Voice wired Megapass Total RevenueBJwpkv\oBwuFK Others

Emerging as Major Cash Cow from 2001


Slide 18

1818

KT’s Advantages

Network Architecture Designing Network Architecture Designing

Network Management SystemNetwork Management System

Maintenance on the user sideMaintenance on the user side

Operation & Maintenance Capability Operation & Maintenance Capability

KT has merits in ADSL Business which It gets faster than others


Slide 19

1919

Intentions

¦ Providing unificated solution for user’s Value Networking

? User-oriented wire/wireless convergence service of Seamless Connectivity

¦ Convergence of KT group capability thru Confirmation of assignment of rolls and real-time coordination between Business sectors and group companies ? Prevent dispersion of group capability thru coordination of the whole

business system

¦ Maximizing profit thru United adjustment and elaborateness of Business ModelB?BExploit business strategy for maximizing synergy thru packaging

businesses concerned

a . Future Plan of KT Broadband Service

Slide 20

2020

Short Term Roadmap

- First stepper

as Telco bringing

it into wide use

- Providing

broadband

service on IP

without

diverting

protocol from

Internet

backbone to

end spot

Metro-Ethernet(2001.12)

Nespot(2002.1)

Ntopia V(2002.3)

VOD(2002.5)

PDA Portal(2002.4)

- Providing

high-speed

wireless

Internet

service over

notebook or

PDA in the

places of

indoorusers,

SOHO and in

Hot Spot

- Providing

high-speed

broadband

Internet

service of

symmetric

10~13Mbps

for newly-

built APT

- Providing exclusive- PDA- use portal available anytime, anywhere tying wire communication and wireless one thru wire/wireless converged device with a largr screen of 4"~6" of high quality

- Transmission business of multimedia of animated video based on next stage broadband service, Metro- Ethernet and Ntopia

Short-term Roadmap on Key Businesses Aimed at Reducing the Timeto Market


Slide 21

2121

2001 2002 2003 2004 2005

Band-width

2~8Mbps

Symmetric 10~13Mbps

20Mbps

• ADSL• B&A• Ntopia

• Ntopia V• VOD• Interactive TV

• FTTH• HDTV• 3D

• Network Game

• Chatting

• Internet Banking

• VOD

• P2P

• Set-top Box

• Home Networking

• VoIP

• Working at home

Long Term Roadmap

Pushing forward with the broadband business expansion, in tandem with the trend towards cross-industrial convergence


Slide 22

2222

Ntopia V

" Next Stage Broadband Internet Service a Realizing Value-Networking based on the maximized conveniences of communication a Fundamental network of future services- Moving images, VOD, wireless

LAN, Home Networking

" Service Concept

a Basic

a Package

NtopiaV Speed : Symmetric 10 ~ 13 Mbps Speed : Symmetric 10 ~ 13 Mbps

Tariff : 30~40 US$ Tariff : 30~40 US$

Ntopia VNtopia V + VODVOD

Ntopia VNtopia V + Nespot(Wireless LAN)Nespot(Wireless LAN)


Slide 23

2323

Wireless LAN

¦ Definition ? Creating new business opportunity by integrating the wireline broadband service with

the mobility of wireless services, using wireless LAN technology such as 802.1X

¦ Considerations ? As the world’s first public business model, Nespot has some technical and business

issues to be ironed out

- e.g., indoor solution (AP+ xDSL), development of corporate & educational solution,

synchronization among services

¦ Strategy ? Step#1 : Maximize synergy providing package services, W-LAN(Notebook) + Megapass +

Leased Line

? Step#2 : PDA-based, roaming with PCS

¦ Future Plan ? Install 200 thousand Access Points in Hot Spot areas


Slide 24

2424

Home Networking

Bluetooth(AP)

Home Networking Architecture

STBHubSwitch

Telephoneoffice

Home Gateway composing map

HomeGateway

FTTH

Remote control,Monitoring indoor

• Illegal IP share • Propelling of Home Automation by cyber APT constructors • Increase in users‘ needs for Internet on TV, video, VOD

• Induction of indoor use of authorized IP thru supplying LAN outfits• Propelling standardization of Home Gateway equipments• Launching video and VOD services

Considerations Future Plan

How to Cope with the Emerging Home Networking Market


Slide 25

2525

VOD

Set topBox

Internet network

Choose the channel at the user’s convinience usingremote control

Checking price, time upon using thegenre (e.g.,drama,action movie,..

Confirmation of programa watching

Symmetric 13Mbps

Indoor PC: One or twicethe currentspeed

VOD via TV: Watching video using remote control at home

Creating a true multi-portal-based VOD service based on the next-generation broadband Internet service


Slide 26

2626

Bizmeka

2.8 Million SME2.8 Million SME

Business Partners•• Solution Suppliers Solution Suppliers•• Corporate CP Corporate CP•• Consulting Firms Consulting Firms•• SI / NI Carriers SI / NI Carriers•• e Marketplace e Marketplace

Relevant Authorities/Organizations

•• Government Government•• Local Autonomous Bodies Local Autonomous Bodies•• SME-Related Organizations SME-Related Organizations•• Tax Authority Tax Authority•• Financial Institutions Financial Institutions

Web basedTotal Solution

Solution

UtilityE-Market

Consulting

SI/NI

Off-lineChannel

B to B Portal solution named Bizmeka which chains Business concernedeach others such as 2.8M SME, Solution suppliers, Vendors

.�7


Slide 27

2727

Picture in 2005

KT’s Picture in 2005 when KT is one of the Best Company in the World

Fueled by New Services

. Next Stage Broadband

Service(Ntopia V)

. Wireless LAN(Nespot) + PCS

. Home Networking

. Animated Video(VOD…) etc

RevenueRevenue

OperatingIncome RateOperating

Income Rate

Net IncomeNet Income

ROEROE

16 Billion16 Billion

25 %25 %

2.5 Billion2.5 Billion

17.7%17.7%

(Unit:US$)


Slide 28

2828

Realizing Value Networking

KT-PCSWireless LAN

VOD

Metro-Ethernet Nespot(wireless LAN)

Fiber

In station

Hot Spot

KT-PCSOne-Phone

Home

HomeWiredTelephone

Office In car

KT-PCSGPS

APFiber

Fiber

Fiber

VODserver

GSR

Home

Office

Providing an integrated service environment to enable users to utilizevaluable communications platform, with any device at anytime and anywhere

MegapassDSLAM


Documents

Success and More - OECD · 760 425 Total # of Sub: 4,017 Total # of Sub: 11,059 3,904 1,890 1.226 976 a . KT Broadband Access Overview. Slide 7 7 B KT Broadband Service Performance